The role of the membrane hydration layer in preventing membrane oxidative damage has been evaluated by comparing bilayers with and without an extended hydration layer. The extended hydration layer was obtained through the use of a novel phospholipid in which polyethylene glycol of 2000 Da molecular mass (PEG2000) was covalently attached to the phosphate headgroup of a phospholipid backbone to form dihexadecylphosphatidyl PEG2000—α-{[2,3-bis(hexadecyloxy)propoxy](h ydroxyphosphinoyl}-ω-methoxypoly(oxyethane-1,2-diyl) monosodium salt. The amount of water bound to free PEG and to the DHP-PEG2000 was determined by differential scanning calorimetry. Small unilamellar liposomes composed of egg phosphatidylcholine and DHP-PEG2000 were prepared. 44% of the phospholipid contained one polyunsaturated acyl chain. Oxidative damage to liposomes after exposure to three different oxidation procedures was measured by the disappearance of polyunsaturated acyl chains, as determined by GC. Oxidation procedures used were: (i) exposure to ionizing γ-irradiation (9200 Gy), for which the grafted PEG2000 provided significant protection against oxidation, with minimal damage to the PEG2000 as determined by 1H NMR and TLC. (ii) Storage for 6 months at 4 °C or for 4 months at 4 °C followed by 4 d at 37 °C, for which the presence of DHP-PEG2000retarded acyl chain peroxidation. (iii) Oxidation of the liposomes by 2,2′-azo(2-amidinopropane) dihydrochloride (a positively charged water-soluble peroxyl radical initiator), for which there was no protection by DHP-PEG2000 (probably due to electrostatic binding of the AAPH to the negatively charged membranes, thereby overriding the hydration layer protection barrier).